This recent article in the New York Times should remind us that employers can get themselves into trouble by offering “unpaid internships” that are not really internships. Agencies in several different states have investigated the use of internships and have, in some cases, fined employers who are actually using the interns to provide unpaid labor. As one official at the federal Department of Labor suggested: “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”
In order for the “intern” to qualify as an unpaid “trainee” and not an “employee” (who must be paid), six criteria must be met:
1. The training received, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
Most employers find that the fourth factor is the most difficult to meet because an intern’s activities will generally provide some benefit to the company. Only if all of the factors listed above are met is the worker a “trainee” do the minimum wage and overtime provisions of the Fair Labor Standards Act not apply. By contrast, the mere fact that an employer labels a worker as a trainee and the worker’s activities as training does not make the worker an intern or trainee for purposes of the FLSA unless the six factors are met.
I recommend that any employer that uses interns use a written agreement setting out these six factors, and designate a manager to ensure that each factor is being met.
And does anyone think that Ross is really an intern on the Tonight Show?